How Effective is Joint Public and Private Monitoring? The Case of the Aicpa Auditor Change Notification Letter

27 Pages Posted: 7 Oct 1999

See all articles by Michael Ettredge

Michael Ettredge

University of Kansas - Accounting and Information Systems Area

David B. Smith

University of Nebraska

Mary S. Stone

University of Alabama - Culverhouse College of Commerce & Business Administration

Date Written: June 25, 1999

Abstract

The AICPA SEC Practice Section notification rule requires a member firm to notify its former client and the Chief Accountant of the SEC in writing within five business days of the date it determines the client-auditor relationship has ended. The rule is unique because it was developed and is enforced by a private organization (the AICPA) to assist a public organization (the SEC) in fulfilling its charge of ensuring full, timely disclosure of relevant registrant information. A three-year SECPS educational effort to make members aware of their notification responsibilities recently ended. Our paper evaluates the effectiveness of the SECPS educational effort and the SECPS notification letter. It shows that registrant as well as auditor compliance and timeliness have increased during the time the notification rule has been in effect, and that the improved registrant performance is likely due in part to improved auditor performance.

JEL Classification: M49, G18

Suggested Citation

Ettredge, Michael L. and Smith, David Brian2 and Stone, Mary S., How Effective is Joint Public and Private Monitoring? The Case of the Aicpa Auditor Change Notification Letter (June 25, 1999). Available at SSRN: https://ssrn.com/abstract=172068 or http://dx.doi.org/10.2139/ssrn.172068

Michael L. Ettredge (Contact Author)

University of Kansas - Accounting and Information Systems Area ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-7537 (Phone)
785-864-5328 (Fax)

David Brian2 Smith

University of Nebraska ( email )

College of Business Business Administration
Lincoln, NE 68588
United States
402-472-2927 (Phone)
402-472-4100 (Fax)

Mary S. Stone

University of Alabama - Culverhouse College of Commerce & Business Administration ( email )

Box 870223
School of Accountancy 314 Alston Hall
Tuscaloosa, AL 35487-0223
United States
205-348-2915 (Phone)
205-348-8453 (Fax)

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